Accepting Zero in the Ultimatum Game: Selfish Nash Response?

Date: 2012-01
By: Gianandrea Staffiero (Universitat Pompeu Fabra)
Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies,Istanbul Bilgi University)
Antonio M. Espín
URL: http://d.repec.org/n?u=RePEc:msc:wpaper:201203&r=net
The rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie†remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare.
Keywords: ultimatum game, dictator game, altruism, social welfare, costly punishment, selfishness, social preferences
JEL: C93

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